Business entities in DRC

The Investment Code allows for legal structures in the Democratic Republic of Congo, which are close to those existing in France and Belgium. Business setup requirements are relatively simple, and most foreigners use limited liability companies (OHADA SARL) or simplified joint stock companies (SAS) to do business in the country. However, entrepreneurs should be prepared for inconsistent regulations, bureaucratic challenges and licensing delays, which Healy Consultants Group PLC will assist to minimize and overcome.

Doing business in Democratic Republic of Congo with a local entity

The DRC limited liability company (societe a responsabilite limitee or SARL)

Foreigners can register a limited liability company with only i) one shareholder, investing a minimum of US$1 (CFA1); and ii) the appointment of one director, who does not need to be resident in the country. Because the amount of capital of the entity must be included in all corporate documents (invoices and brochure included), it is recommended to have higher initial investments;

Before the company is registered, it is necessary to open a capital account with a local bank and to inject the paid up capital of the entity. After issuance of the company numbers, the entity must then register for tax and social security with the Tax authority, the Social Security office and the Ministry of Labor;

Companies are thereafter required to submit annual financial statements and an annual tax return every year;

Best uses for a DRC SARL: a limited liability company can be used for most types of business activities. It can trade with local and international customers, have local manufacturing operations and/or render services.

Since 2014, foreign and local investors can set up simplified joint stock companies, which follow the French business entity of the same name. This entity is similar to an SARL but offers much more flexibility regarding the governance of the company, notably with regards to the transferability of the shares;

Like an SARL, a simplified joint stock company can be registered by a single shareholder with a minimum paid-up capital of US$1 only, to be injected before company registration. Appointment of one director is a mandatory requirement, but the director need not be a resident of the DRC;

Best uses for a DRC simplified joint stock company: a simplified joint stock company is a good vehicle when multiple investors want to invest in the same business, while keeping an “exit” option by allowing share transfers without the agreement of the other shareholders.

The Democratic Republic of Congo public limited company (Societe anonyme or SA)

A DRC public limited company can be setup with i) 3 shareholders, who can be of any nationality and do not need to be resident in the DRC; ii) a minimum paid-up capital of US$20,000; and iii) a statutory auditor. While it is possible to appoint a single director, the appointment of a management Board including three members is customary;

Like other business entities, PLCs are required to submit each year financial statements and a tax return to the Ministry of Finance. The financial statements of a PLC must always be audited;

Best uses for a DRC public limited company: a PLC is a good vehicle if our Client is planning to form a business with several partners or plans to finance the business through the issuance of equity. In other cases, a limited liability company or a simplified joint stock company are simpler and more cost efficient to maintain.

The company can then be registered within an industrial park or a special economic zone after review and approval by the relevant authority;

The National Agency for Investment Promotion (ANAPI) follows some criteria for the Special Economic Zone (SEZ) program registration, which vary significantly according to the project. They usually include a minimum investment (at least US$200,000 recommended) and at least some job creations in the DRC to train the national staff;

Projects eligible for free zone registration are also usually eligible for general tax regime incentives. See this descriptive of the DRC special economic zones (only in French) for further details;

Companies registered in the free zone enjoy a corporate tax exemption, provided they fulfill the criteria according to their main business activity;

Best uses for a DRC free zone company: Foreigners can register a company in one of Democratic Republic of Congo’s special economic zones if they plan to manufacture and export most of their products. The top industries welcoming foreign investments are i) hydroelectricity; ii) exploitation of oil and bauxite; iii) maritime manufacturing; iv) heavy industries based on copper and cobalt; v) timber industry; and vi) agribusiness.

Doing business in the Democratic Republic of Congo with a foreign entity

The Democratic Republic of Congo branch office (Succursale)

Another approach of establishing an office in the DRC is to register a branch office of a foreign company. No paid-up capital is necessary for a branch. Foreign entities can however only register branches in the DRC for a maximum of two years, following which the branch must either be deregistered or converted into a subsidiary;

Best uses for a DRC branch: registering a branch is usually not recommended, except in regulated industries, where registration of a foreign reputable entity instead of a subsidiary can ease up the licensing process. A branch is a practical option for a foreign company wishing to establish a business in the Democratic Republic of Congo under the same name and with the same business activity, as the parent company

The Democratic Republic of Congo representative office (Bureau de Liaison)

Like for branches, local regulations forbid foreign companies to maintain a representative office for more than two years in the DRC. This entity can only engage in i) market research; and ii) promotion of the foreign company’s business;

Best uses for a DRC representative office: registering a representative office is a good option to have a local presence in the DRC, without being subject to local tax and while benefitting from lower reporting requirements. However, such entity is not allowed to trade or conduct manufacturing operations.

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Testimonial

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